free samples

[Madhavan iyengar]

Where free samples are given ( could be customers or outsiders) GST treatment

Is following treatment appropriate

a) since free samples are of finished product and presumable of fresh product GST has to be discharged on market value of the FOC product by supplier and shown in B2C in GSTR-1 ( even if given to a regd person) and requires no ITC reversal.

b) sec 17(5) (h) - reversal of ITC would apply only in case of disposal of samples, since word disposal has been used ie where the sample is of inferior quality then ITC to be reversed

AI Summary

GST treatment of free samples: tax on open market value or reverse input tax credit, with documented methodology required.
GST treatment of free samples involves either taxing the distribution on the Open Market Value of the finished product as an outward supply or applying Input Tax Credit Reversal rules where ITC must be reversed for goods used for non-business or free distributions; taxpayers must adopt and document a principled methodology for valuation or ITC apportionment to support their treatment.